Each week we’re giving you our weekly report highlighting the top compliance news articles from various industry news publications. We have selected the most relevant and important news articles related to registered investment adviser (“RIA”) compliance and regulatory issues. This week’s recap focuses on various industry constituents chiming in on the latest Department of Labor (“DOL”) fiduciary rule delay. Check back each week for the latest list of top stories.
Here’s our top investment adviser compliance articles for the week of April 15, 2017:
- Still Wondering What the Fiduciary Rule is? You’re Not Alone (Author- Alessandra Malito, Market Watch)
According to personal finance reporter, Alessandra Malito, many in the general public still are not familiar with the DOL fiduciary rule. IN her appeal to the broader public she notes that this “ignorance may affect your retirement savings.” Malito further writes that, “Only 32% of adults had heard of the fiduciary rule, according to a survey of 1,000 adults conducted on behalf of one of the original retirement robo advisers, Financial Engines.” The chief investment officer at Financial Engines, Chris Jones, claims “these are things people don’t pay a lot of attention to unless you are in the industry in some way.”
- RIA Lobby Fires Off Letter to DOL Claiming Rules Aimed at Reining in Overzealous Stockbroker Sales Pitches Chill RIA Conversations With Their Prospects (Author- Lisa Shidler, RIABiz)
RIABiz’s Lisa Shidler discusses a letter from the Investment Adviser Association (“IAA”), an RIA industry group, in an April 17 letter to the DOL The message from the IAA includes, “Go ahead and hold RIAs to account if they put their firm’s interests ahead of client’s — just don’t punish them for the sales-y comments they make to prospective clients during the fraught courtship process.” The point of the letter was for the IAA to advise the DOL to “revise the fiduciary rule and to eliminate language that might turn a sales process into a deposition down the road.” Shidler further discusses in her article what activity may deem an advisor to be considered a fiduciary.
- Morningstar Pushes Change in DOL Fiduciary Rule Enforcement (Author- Bernice Napach, ThinkAdvisor)
The DOL has delayed the fiduciary rule’s implementation for 60 days, until June 9, 2017. Bernice Napach, ThinkAdvisor Senior Writer, reports “in its first comment letter to the Labor Department on the substance of the agency’s fiduciary rule, Morningstar explains its support for the rule but offers an alternative to the Best Interest Contract Exemption (BICE) and enforcement by way of class action lawsuits.” In particular, according to Napach, Morningstar proposes an alternative that “‘big data system’ provided by a neutral third party that reviews individual portfolios for providing ‘best interest standard of advice,’ identifying problems and fixes. Every investor’s account would be scored to identify those that don’t conform to an investor’s needs for investment quality, portfolio fit and planning value.”
- Vanguard Proposes Revisions, Further Delay of DOL Rule (Author- Christopher Robbins, Financial Advisor)
Bill McNabb, Vanguard Chairman and CEO, sent a letter on Monday to the DOL arguing “the rule’s best-interest standards should be modified to address concerns about access to retirement and investment advice, and that the rule’s delay should be extended to allow for analysis and revisions.” The rule’s applicability date is currently delayed until at least June 9, 2017. Financial Advisor reporter, Christopher Robbins, informs “Vanguard’s letter strongly supports applying a fiduciary standard to retirement advice.” Robbins discusses the Vanguard letter to the DOL in detail in this article.
- Financial Choice Act to Be Reintroduced by End of April (Author- Melanie Waddell, ThinkAdvisor)
Think Advisor’s Melanie Waddell brings us this article on how Rep. Jeb Hensarling’s Financial Choice Act is said to be reintroduced by the end of April 2017. It is intended to replace the Dodd-Frank Act. Waddell states, “the memo released Tuesday outlining what the new version of Choice Act will look like also requires the chairman of the Securities and Exchange Commission to establish an advisory committee on the SEC’s enforcement policies and practices.” Rep. Maxine Waters, D-Calif., the top democrat on the committee strongly opposes the Choice Act and was not afraid to voice her opinions on this. Waters refers to it as the “Wrong Choice Act 2.0.”
Don’t forget to check out last week’s top RIA compliance news articles on the DOL fiduciary rule, succession planning, and the latest phase of the “breakaway broker” movement. Be sure to check back next Friday for next week’s top articles!